Nodal price separations in Day-Ahead (DA) market caused by transmission congestion create congestion charges/surplus that are reallocated to the market participants through the financial transmission right (FTR) auction. From a market participant's viewpoint, these two markets are interrelated because the revenue of market participant in FTR auction is determined based on the day-ahead locational marginal prices. Furthermore, virtual transactions which are designed to improve price convergence between the day-ahead and real-time markets can directly impact day-ahead prices. This impact through virtual transactions may be utilized by a market participant to increase its FTR value and improve its overall strategy in participating in both FTR auction and day-ahead market. To this end, this paper is the first attempt to reveal this tactic in literature and proposes an offer strategy framework for a price-maker generating company participating in both FTR auction and day-ahead market with the consideration of virtual bidding. First, the possibility of FTR value manipulation is conceptually demonstrated by placing virtual bids in the day-ahead market. Second, a two-stage bi-level offering strategy model is formulated for strategic GenCos, which is further converted to a single-level optimization problem by using Karush-Kuhn-Tucker conditions and strong duality theory. Numerical tests on a 5-bus system and IEEE reliability test system (RTS) demonstrate the effectiveness and applicability of the proposed approach.
H. Mehdipourpicha et al., "Optimal Offering Strategy Of GenCo With Joint Participation In FTR Auction And Day-Ahead Market Considering Virtual Bidding," IEEE Transactions on Power Systems, vol. 38, no. 3, pp. 2247 - 2260, Institute of Electrical and Electronics Engineers, May 2023.
The definitive version is available at https://doi.org/10.1109/TPWRS.2022.3189592
Electrical and Computer Engineering
Keywords and Phrases
Bidding; day-ahead market; FTR auction; manipulation; offering strategy; virtual bidding
International Standard Serial Number (ISSN)
Article - Journal
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01 May 2023